Trading with point and figure

[Dentalfloss]

a tad oversold

 

[Dentalfloss]

DAX into the open

 

[Dentalfloss]

SPX into the open
At this point it looks like a dead cat bounce

 

[Dentalfloss]

poss oversold
we look to see if 2750 becomes support on retrace

 

[Dentalfloss]

FTSE
some long "O" columns....

 

[Dentalfloss]

close up

 

[Dentalfloss]

it could be bouncing around waiting for a Brexit decision

 

[Dentalfloss]

Mornin folks

 

[Dentalfloss]

our rez played out well....had i been awake

 

[Dentalfloss]

Dow updated

 

[Dentalfloss]

SPX in to the open as we said...bulls need to keep it above 2750

 

[Dentalfloss]

 

[Dentalfloss]

A quick look at the Dax

 

[Dentalfloss]

 

[Dentalfloss]

lookin a tad oversold

 

[Dentalfloss]

 

[Dentalfloss]

in support

 

[Dentalfloss]

oil

 

[Dentalfloss]

Good Morning: The Long & the Short of it and The Bigger Picture - 11 March 2019 - ADM ISI

Ostwald, Marc
08:40 (48 minutes ago)



to Marc






- Busy schedule of data, above all weekend and overnight, focus ahead on
US Retail Sales, as Powell re-emphasizes Fed on hold for a protracted
period; Eurogroup Meeting; IEA oil report to digest ahead of CERAWeek;
US to sell 3-yr; Brexit drama in focus; Trump FY2010 Budget plans

- Data digest: China inflation and money data soft; German Trade data
encouraging, Jan Production drop mitigated by Dec revision; Norway
CPI jump cements rate hike expectations

- US Retail Sales: autos and gasoline price to weigh on headline, rebound
from 'dire' December slide seen; enormous scope for revision/outlier

- Morning Call audio preview:
https://www.mixcloud.com/MOstwaldADM/adm-isi-morning-call-macro-market-preview-11-march-2019/

- Charts: US HY Bond avg spread vs S&P500; IMM COT EUR & JPY positioning vs. spot

..........................................................................

********************
** EVENTS PREVIEW **
********************

Via way of a reminder, the USA and Canada moved their clocks forward one hour on Sunday morning, i.e. New York is now GMT -4, and Chicago GMT -5, with Europe only moving to 'summer time' on the last Sunday in March.

In terms of the day's schedule, US Retail Sales is the only major statistic still to be published, though there is plenty to digest from the weekend and overnight, including overall soft Chinese CPI, PPI and Lending, German Trade (exports and imports holding up better than expected) and Industrial Production (Jan weaker than forecast, but Dec revised sharply higher, mirroring orders), much stronger than expected Norwegian CPI (cementing rate hike forecasts) and weaker than forecast Turkish GDP, as well as the first 'up to date' set of CFTC COT reports since December, and the Powell (emphasizing rates on hold for a protracted period) interview on last night's CBS "60 Minutes". In event terms, the Euro group's finance ministers hold a regular meeting, which will discuss Greek reforms, taxing internet companies and the Eurozone budget, the latter coming after some very clear signals from Germany's CDU leader Kramp-Karrenbauer over the weekend that Germany remains opposed to the 'centralism' inherent in Macron's proposals, as well as most aspects of budget pooling, though would support more effort on finally achieving 'banking union'. The White House publishes Trump's fiscal 2020 budgte proposals, which will eminently fall flat on its face, above all given yet another demand for $8.6 Bln of funding for his Mexico border wall; the key immediate question is when the 'Debt Ceiling' is going to be raised. Elsewhere the CERAweek energy conference kicks off in the US, with OPEC's Barkindo and US Secretary of State Pompeo among the speakers, and this follows the latest monthly IEA report, which suggests demand will remain relatively weak above all compared to growth in US output, and on the auction front the US kicks off this week's Treasury refunding with $38 Bln of 3-yr T-Notes.

** U.S.A. - Jan Retail Sales **
- Headline sales are likely to see a large drag from Autos and some from gasoline prices, with the consensus look for flat m/m after the unexpectedly sharp 1.2% m/m slide in December, while the core "control group" is seen bouncing 0.6% m/m after a very steep -1.7% m/m in December. As noted at the time of publication of the December data, and despite the Census bureau asserting that despite shutdown, the quality of the December data was 'normal throughout', the dismal readings simply did not fit with the anecdotal evidence, be that Redbook or individual retailer reports. Per se the chance of another large outlier, and/or some very sizeable revisions looks to be very high, and could leave markets feeling a little confused about underlying trends.


RECAP - Week Ahead Preview:

The week ahead has, as is typical for the second working week of the month, a busy run of US, China and UK statistics, even if this will likely be subordinate to ongoing political considerations - another Brexit vote, US/China Trade negotiations, the threat of US auto tariffs and the final week of the annual China NPC meeting. The White House publishes its Fiscal 2020 budget proposals on Monday and the UK Chancellor also presents his spring Budget update on Wednesday. The govt bond auction schedule is dominated by the US with 3, 10 & 30-yr, while Italy holds its 3, 7 & long dated BTP sales, Germany sells 10-yr and the UK 30-yr. OPEC also publishes its monthly Oil Market Report. The BoJ is the only major central bank holding a policy meeting. Corporate earnings are still relatively plentiful.

- The narrative around the global economy remains rather gloomy, even if there is an element of cherry picking on US data, for example: the very blinkered focus on Friday's weak Payrolls, rather than the broad based strength in the rest of the labour data. Be that as it may, the week kicks off with Saturday's Chinese CPI (exp. 1.5% vs. Jan 1.7%) and PPI (exp. 0.2% vs. Jan 0.1%), which will doubtless prompt some of the ‘commentariat’ to talk of China exporting deflation; the focus then moves to its Jan/Feb activity data, which will probably reinforce concerns about growth prospects. Retail Sales are seen dropping from 9.0% to 8.1% y/y, which would be the lowest since June 2003 (with the 18.8% fall in Auto Sales the biggest drag), while Industrial Production is expected to fall to 5.5% y/y from 6.2%, but Fixed Asset Investment is forecast to be little changed at 6.0% vs. 5.9%, as the drag from public sector FAI exercises less of a drag. The latter should also impact Aggregate Social Financing as was the case with CNY 4.46 Trln surge in January, though a mean reversion to CNY 1.3 Trln is predicted for February, with Yuan Lending also seen back to a more normal CNY 950 Bln from January's outsized CNY 3.23 Trln. Property Investment and Prices are also due.

In the US, there is still an element of 'catch-up' due to the govt shutdown, with headline January Retail Sales today ahead of January Durable Goods, with headline seen at -0.6%, and ex-Transport at a rather lacklustre +0.2%, with New Home Sales (also Jan) forecast at 0.6% after +3.7% in December. In terms of 'current' (i.e. February) data, the full gamut of inflation readings are due, though CPI is expected to be unchanged at 1.6% y/y headline and 2.2% core, with little changed seen in PPI either in yr/yr terms, while Industrial Production and Manufacturing Output are both predicted to bounce 0.4% m/m, after falling 0.6% and 0.9% in January. Construction Spending, NY Fed survey and NFIB Small Business Optimism are also scheduled.

While all eyes will be on the Brexit vote(s), Tuesday also sees a raft of monthly activity data for the UK, which is likely to confirm that the economy is running only just above stall speed. January monthly GDP and the key Index of Services are seen rebounding 0.2% m/m after dropping 0.4% and 0.2% in December, and a similar bounce is anticipated for Industrial Production and Manufacturing Output after falling 0.5% adn 0.7% in December, with the erratic Construction Output measure forecast at 0.8% m/m (Dec -2.8%). The Trade deficit is seen barely changed, while the RICS House Price Balance is expected to remain at rather dire levels -24 from Jan -22.

Elsewhere Germany's Industrial Production is forecast to eke out a 0.4% m/m bounce from December's -0.4%, thus not really mirroring the much better than forecast readings seen in France, Italy and Spain, though the latter suggest some upside risks, despite the poor PMI and Ifo readings. Trade data is expected to show a modestly bigger surplus, but well below average levels of recent years, while a reactive correction is expected (-0.5% and -0.1% m/m respectively to the big gains for both Exports and to a lesser extent Imports seen in December). Over in Japan the ever volatile Private Machinery Orders are seen posting a 1.5% m/m fall after slipping 0.1% in December, in principle echoing monthly sector surveys. The Q1 BSI survey, PPI and Tertiary Industry Index are also due. Australia has the latest Housing Finance data, where a slightly less dismal -2.0% m/m is projected after posting a very large -8.4% m/m drop in December, per se echoing house price data. Canada has Manufacturing and New Home Sales, while Brazil looks to IPCA IBGE inflation, Industrial Production and Retail Sales, and Monday also sees the quarterly Manpower Employment Intentions surveys published globally.

- On the central bank front the BoJ is not expected to make any policy changes to its QQE or Yield Curve Control policies, though with the dovish Fed and ECB moves, and 10-yr JGB yields erring into negative territory (still within the 0% +/-20 bps target range, and an inverted JGB yield curve out to 7 years, Kuroda & co are under some pressure. Recent soundbites from BoJ speakers have emphasized a willingness to ease further if the economy loses traction significantly, but the BoJ's actual room for manoeuvre is very much constrained, above all given the intense pressure on bank profits due to its protracted easing. The Fed enters its pre-meeting 'purdah' period, though ECB, BoC and Riksbank speakers will be plentiful.

- In terms of the UK Brexit vote in parliament, at the time of writing, there appears to be little prospect of anything other than another probably smaller, but still significant defeat for PM May's Withdrawal Agreement, with little sign of a breakthrough on the key Irish backstop issue - 'never say never' is probably the correct perspective. If it does fail, then a vote on 'No Deal' Brexit is scheduled Wednesday, and if that fails a vote to extend Article 50 is scheduled for Thursday. The possibility of all votes failing cannot be ruled out, leaving the UK looking 'ungovernable' and implying that the only way to break the deadlock would be a General Election, though even that might fail.

 

[Dentalfloss]

SPX
bulls are there